Stock Market

F O: Nifty trading range shifts to 10,600-11,333

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By Chandan TapariaNSE Nifty opened with a huge gap down and fell below the 10,850 level in the initial trades on Friday.

In a mild rebound attempt, the index recovered 200 points from its intraday lows.

However, it closed below its major support of 11,000 and formed a bearish candle on the weekly chart. The week gone by was majorly dominated by the bears, as we witnessed selling pressure at higher levels.

Nifty continued to make lower highs and lower lows for a third consecutive week, and closed below its crucial support of 100-EMA and rising trend line on weekly scale, which doesn’t bode well for the bulls. The RSI oscillator also gave trend line breakdown on the weekly chart, indicating further weakness in the index.

Resistance is gradually shifting lower and now 11,250 and 11,433 levels would be immediate hurdles for the index.

The support is placed at 10,800 and then 10,650. Till the time volatility cools down and the price settles, we won’t see a strong reversal.

Traders should avoid bottom fishing and try to catch a falling knife. On the options front, maximum Call open interest was at 12,000 and then 11,500 strike, while Maximum Put OI was at 11,000 and then 10,500 strike.

Call writing was seen at 11,000 and then 11,500 strike, while Put unwinding was seen at the immediate strike.

Options data indicates a shift in trading range between 10,600 and 11,333. India VIX moved up sharply 10.29 per cent to the 25.64 level.

India VIX is sustaining above the horizontal trend line on the daily scale, and thus volatile swings may continue in the coming days. Bank Nifty opened on a negative note and corrected sharply towards the 27,162 level in the initial hour of trades.

In line with the benchmark indices, the bank index also witnessed some recovery from the lower levels and concluded the session around the 27,800 mark.

It underperformed the benchmark index and formed a big bearish candle for the second week in a row.

It continued its lower highs and lower lows sequence for a third consecutive week, and closed below its major support of 100-EMA and rising trend line on weekly chart.

The momentum oscillator RSI is moving in the oversold territory on the daily scale, but there is no sign of reversal seen on price.

Traders should avoid bottom fishing as ongoing correction may accelerate towards 27,000 and 26,560.

On the flipside, major resistance is shifting lower to 28,500 and then 29,300. Nifty futures closed with a loss of 2.94 per cent at the 10,925 level.

We witnessed long buildup in very few stocks such as Pidilite and Cadila Healthcare, while shorts were seen in RBL Bank, MFSL, Tata Motors, LIC Housing Finance and Tata Steel. (Chandan Taparia is Technical - Derivative Analyst at MOFSL.

Investors are advised to consult financial advisers before taking an investment calls based on these observations)




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Category: Stock Market


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